How The Online Insurance Space Evolved In India

The industry is marred by many issues: customers find policies complicated, have several cases of being ‘mis-sold’ and have hassles with claims.

It was largely an issue of information asymmetry between the insurance players and the customers, and traditional channels (agents) have been unable to resolve the asymmetry, and sometimes, unwittingly, even added to the problem.

The insurance industry in India is fairly nascent in comparison to its global counterparts especially the UK and US markets.

We stand at a meager penetration of 3.9 per cent, way below the world average of 6.3 per cent.

Of this, online insurance is even newer and smaller. However, there is rapid evolution and exponential growth happening in this space.

With the meteoric rise of ecommerce and quick adoption of internet based transactions in India, the online insurance industry is at the cusp of unlocking its tremendous, infinite potential.

A BCG Google report claims that by the year 2020, the non life insurance industry is poised to grow to 3-3.5X to about INR 230k crores, of which online insurance will contribute most to this growth.

In fact, the online insurance market in India is likely to grow 20 times. Moreover, 3 in every 4 insurance policies sold will be impacted by digital channels at either pre-purchase stage, purchase or renewal stages.

The online insurance industry in India mainly comprises of insurance companies that now sell insurance through their website or via web aggregators such as Policybazaar and brokers such as Coverfox which act like insurance marketplaces allowing you to compare and buy.

Insurance industry is highly regulated by IRDA and the kind of license a company holds, pretty much defines their business model.

So while web aggregators earn revenue through the leads they generate on the portal, a broker like Coverfox simply earns revenue on the commission they earn on each policy sold.

While each of the models has its pros and cons from the point of view of the enterprise as well as the customers, we’d elaborate here on how the brokerage model is working and changing the status quo of the industry itself.

As a brokerage launched about 2 years ago, our goal was to make insurance shopping quick, convenient, and transparent. We wanted to make buying insurance as easy as buying air tickets online.

The industry is marred by many issues: customers find policies complicated, have several cases of being ‘mis-sold’ and have hassles with claims.

We felt it was largely an issue of information asymmetry between the insurance players and the customers, and traditional channels (agents) have been unable to resolve the asymmetry, and sometimes, unwittingly, even added to the problem.

Our belief is that the problems mentioned above can be solved, by using technology and by providing the customers with correct and transparent information during their buying journey.

We also felt that customers needed the most support in navigating the tedious claims process. Brokers are well placed to advise customers at the time of purchase and provide direct support during claims.

In our view the following is necessary to do to achieve this goal, and has worked for us:

— Developing great proprietary technology and tech prowess that powers buying of insurance products across insurers in a simple, quick and personal manner for the user.

Our current set up enables our customers to buy their insurance, via the website or mobile website, in less than 5 minutes!

— Making the interface extremely user friendly and contemporary in appearance. In one quick glance, a user is able to understand the key features one needs to consider.

— Investing in a strong support team that hand holds customers through the tedious claims process

— Setting up a qualified advisory team to provide real insights and advice to customers on the right insurance choices, when they look for advice.

Our business model is pure-play insurance, as we strongly believe that there’s tremendous potential within this industry.

But within insurance alone, the surface hasn’t been scratched. For e.g. nobody markets top-up health insurance.

Car insurance pricing is based on the car, not on the driving. Products for start-ups and SME’s are far from what they should and can be.

Gadgets, dental, OPD products, and in-land transit—the industry is yet to see process innovation in product development and sales. So there is a lot to be done within insurance alone and companies that build depth will be the trail blazers.

Currently, lead generation and call center follow-up is still the way the industry works for the most part.

The mindset that the customer will not buy unless they are called several time a day still prevails for most players.

So most websites make it mandatory for visitors to provide their details to move ahead with the purchase.

Our belief is that if information is put out in a sensible, easy to comprehend fashion, customers will be able pick their insurance on their own.

Looking Forward

Truly speaking the road ahead is challenging and at the same time extremely exciting. There are opportunities and challenges in equal measure. For us, bringing about a paradigm shift in the way people perceive insurance is one of the major challenges.

There is lack of trust in insurance sellers because as mentioned above case of frequent mis-selling and opaque processes abound.

Although it won’t change overnight, but we’ve made a start in the right direction proven by the growing number of our customers and patrons, who buy multiple products from us after their initial pleasant experience.

Equally, increasing number of customers in India will rely on online insurance companies according to a number of analysts.

Digital insurance in India is set to become massive also on the back of a growing number of internet users, expected to touch 402 million by end of 2015 (per the recent IAMAI &IMRB report) thanks to the improving infrastructure, affordable internet, and the spread of mobile phones in equal measure to urban and rural India.

Insurance will see a massive change — from being a seller’s market to becoming a buyer’s market.

And online insurance marketplaces are going to be a catalyst in this change by providing a seamless insurance buying experience.

More choices, niche products, rising consumer awareness regarding protection and savings solutions, backed by good technology that enhances customer experience among other factors, all points to digital players leading the insurance industry into a new era.